Recycled Gold has met 60% of Indian Gold Demand on High Gold Prices

Recycled Gold has met 60% of Indian Gold Demand on High Gold Prices

India has traditionally been one of the largest gold markets on the planet, second only to China. However, the high gold prices are threatening India’s status as a leading importer of gold. Indian gold bazaars are the common places of exchange, and lately, their owners have seen a mass movement of people selling their gold jewelry. The market has transformed from whole sellers and brokers to everyday individuals looking to take advantage of the high price of gold, up 22% this year so far.

Gold jewelry is an especially critical piece of the Indian economy and culture. A spike in imports usually occurs during the last half of the year, in anticipation of seasonal festivals where giving gold is a long tradition. The December quarter usually accounts for about a third of India’s gold sales. However, large recycling efforts are dampening the demand as groups like Indian farmers are selling to invest in extra seed.

So much recycled gold has come into the system in the past few months that it has met 45% to 60% of the local gold demand, according to the Wall Street Journal.

Eastern countries have traditionally bought even more than the West when it comes to gold. But 2016 has seen a shift, with Western countries beginning to pick up the slack.

Such a drop in demand in the East could potentially be a problem for global pricing. However, demand for gold in the US has risen 27% this year, with investors buying up American gold eagles and driving their demand up 84% since the first half of the year. Despite gold prices seeing a pullback in the past few months, global prices are still just below record highs.